Stocks pulled off a gain Wednesday, helped by a late rally, as investors bet on a recovery in some big-name techs and amid speculation that the government would extend TARP funds to insurers.
The Dow Jones Industrial Averagegained 47.55, or 0.6 percent, to close at 7,837.11. The S&P 500 added 1.2 percent, and the Nasdaq jumped 1.9 percent.
This snaps a two-day losing streak that resulted from worries about first-quarter earnings.
Stocks had opened higher following a report in the Wall Street Journal that the Treasury might extend TARP funds to some insurers then wobbled as news emerged that no funds had yet been approved for insurers.
American Express was the biggest percentage gainer on the Dow, climbing 4.7 percent. Other insurers also rallied, including Prudential and Lincoln National .
Meanwhile, the Fed reported that demand for the second round of TALF funds was weak, suggesting that managers remained cautious of using the TALF. Investors requested $1.7 billion in TALF funds to juice consumer lending, much less than the $4.7 billion sought in the first round.
And the SEC voted unanimously to approve five new rules to curb "short selling," or betting a stock will fall.
Technology bolted out in front of the pack.
Shares of bankrupt flash memory-chip maker Spansion more than doubled following news that the company will receive $70 million from Samsung to settle patent lawsuits.
Other chip makers also rallied, including National Semiconductor and AMD but Intel skidded.
Microsoft gained more than 2 percent, while Sun Microsystems soared more than 6 percent.
But investors concerns about another weak earnings season nagged at the market.
After the worst fourth-quarter earnings season on record, the first-quarter season kicked off with a thud Monday as aluminum maker Alcoa just missed its earnings expectations.
Bed, Bath & Beyond shares hit an eight-month highafter the home-decor chain beat expectations, causing JPMorgan to raise its rating on the stock to "neutral" from "underweight."
This morning, Family Dollar met analysts' earnings target of 60 cents a share. Its shares rose 6 percent.
>> Trader Talk: Prepare for the Earnings 'Talk Down'
Asian and European stock indexes were broadly lower as concerns over corporate earnings spread around the globe.
“We are going to start seeing in the next few weeks the true horror of the credit crunch … (it’s) coming home to roost in the form of horrible and horrendous numbers,” Jack Bouroudjian, chairman of Capital Market Technologies, told CNBC.
Earnings for the S&P 500 companies are expected to fall by nearly 37 percent, according to Thomson Reuters data.
Next up is Chevron , which delivers its preliminary report after the bell Thursday. Next week, it's Johnson & Johnson , Intel , JPMorgan , Citigroup and General Electric .
Banks shares were mixed, with Citigroupdown more than 2 percent and Bank of America off more than 4 percent, while JPMorgan ticked higher.
The word is that Brian Moynihan, the lawyer put in charge of Merrill Lynch after Bank of America's takeover of the ailing brokerage, could be next in line to head Bank of America when current CEO Ken Lewis departs, the Wall Street Journal Reported. Lewis indicated he would leave after the crisis had subsided or within three years.
The morning kicked off with a big merger in the housing industry, with Pulte Homes saying it would buy Texas-based builder Centex for $1.3 billion in stock. The deal would create the nation's largest home builder.
Centex shares surged though less than the 32.6 percent premium that the $10.50 per share offer represents over the company's Tuesday closing price.
The industry got a bit of good news this morning: Mortgage applications rose 4.7 percent last week. Previous gains in home-loan applications have mostly come from refinancing to capitalize on dropping rates, but the bulk of last week's gains stemmed from new purchases, despite a slight uptick in mortgage rates.
Still, mortgage rates could fall to 4.2 percentby the end of the year as the industry recovery remains slow, economists at Bank of America-Merrill Lynch said.
And, while there are a few twinkling signs of recovery for the economy, the pros say it's going to be a while.
Nouriel Roubini, a professor at New York University's Stern School of Business who is known for his bearish views, said he expects dire economic conditions will persist. Roubini also thinks that the bear market in stocks is not over yet.
Dallas Fed President Richard Fisher said the US economy remains in trouble and the Fed is "duty bound to apply every tool" it has to fix the problems.
Volume was already starting to show signs of the holiday-shortened week: About 1.32 billion shares changed hands on the New York Stock Exchange, below last year's daily average of 1.49 billion. Advancers outpaced decliners, 3 to 1.
Still to Come:
THURSDAY: Chain-store sales; BOE announcement; international trade; weekly jobless claims; import/export prices; Lawrence Summers speaks; Bond market closes at 2pm; Preliminary results from Chevron after the bell
FRIDAY: All U.S. financial markets closed for Good Friday
Send comments to cindy.perman@nbcuni.com.
